Patel realises new tactics are required for rag trade
October 19, 2009
By Ethel Hazelhurst
Signs of sanity are always welcome. Economic Development Minister Ebrahim Patel last week explained to the clothing and textile industry that keeping it on perpetual life support and sheltered behind high tariff barriers isn't a viable option.
In his previous role as head of the Southern African Clothing and Textile Workers' Union he may not have been so clear sighted.
Three years ago he welcomed quotas on certain clothing and textile imports from China and complained that Chinese imports had risen 480 percent since 2002, causing the loss of 67 000 jobs. He probably got his figures right but his solution was dead wrong.
Last week he suggested, at the annual general meeting of the national bargaining council for the clothing manufacturing industry, that the industry should develop a new strategy to survive.
Ironically the sector had developed a strategy a few years ago, in a bid to compete with cheap imports from countries that were more effective producers.
Mike Morris, an economist at the University of Cape Town, an expert on the sector, points out that, at the time, there was a "good working relationship between the retail industry, clothing manufacturers and textile manufacturers". But the relationship was destroyed by the import quotas - "a tactic that not only failed but caused a schism in the industry", says Morris, who is "looking forward to the development of a new strategy".
Of course, in those days Patel's brief was the interests of the sector alone, now he has a much wider responsibility.
The world has come a long way since tariff protection and export subsidies were the norm but governments have done a bad job in communicating the benefits of trade to their constituencies.
Standard Bank economist Simon Freemantle last week urged African countries to take advantage of the opportunities offered by new relationships with the Bric countries - Brazil, Russia, India and China. And he warned of the dangers of a "nationalistic race to the bottom".
Standard Bank's research shows trade between Africa and China has grown at a compound annual rate of more than 20 percent since 1992. And the continent's exports to China have grown far faster, from $1 billion (R7.3bn at Friday's exchange rate) to $54bn.
Trade with other Bric countries has also leapt. And in the period in which this trade was ballooning, Africa clawed back some of its lost share of global trade - from 1.7 percent in 2002 to 3 percent last year.
The benefits can only multiply as the region grows. Standard Bank estimates that by 2030, China, India, Brazil and Russia will be the second, fourth, seventh and eighth largest economies in the world.
South Africa will benefit from trade not only because its export markets will expand but also because its consumers will have access to the world's cheapest goods. Low costs effectively increase purchasing power - a blessing particularly to those who have little to spend.
To ensure the benefits, government will have to fight off protectionist lobbies - and not just our government.
A recent Global Trade Alert revealed that Group of 20 (G20) members had passed more than 100 "blatantly discriminatory" measures and governments globally have implemented 280 protectionist measures since the first crisis-related G20 summit in Washington in November 2008.
The best way to promote jobs is to encourage productivity in the local workforce. And the starting point is fixing the dysfunctional education system.
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